SEC finds problems with overseas rules

The Securities and Exchange Commission, which plans to drop a requirement that foreign companies reconcile their financial statements with U.S. accounting standards, found discrepancies in how businesses follow international rules.

Overseas companies in the same industry sometimes present figures on profit and revenue differently, the agency said in a staff report released Tuesday. The regulator said it also found instances in which disclosures were “missing, unclear or generic.”

The SEC intends to recognize international accounting rules by 2009 to reduce corporate compliance costs and make cross- border investing easier. Critics, including former Financial Accounting Standards Board Chairman Dennis Beresford, have said the agency may be moving too quickly, because it’s unclear whether overseas companies apply rules consistently.

The agency proposal, approved June 20, would apply only to companies that use rules approved by the London-based International Accounting Standards Board.

SEC spokesman John Nester declined to elaborate on the staff report. In June, SEC Chairman Christopher Cox said the agency was moving to recognize “a single set of globally recognized standards.”

The regulator will seek public comment on the proposal for 75 days. The commission must take a final vote before the new regulation can take effect.

The SEC said it asked companies to explain their accounting policies after it found differences in how rules were applied.